What type of pension?

susancorsi

Hi, I am a 28 year old woman trying to figure out what kind of pension is best to get. I do not get one with my employer and I have recently returned from working overseas for 10 years so will not qualify for the full state pension. I am completely lost with all the financial jargon and do not know even where to begin. How much should i be looking to put away in a pension a month and how much in savings? Can anyone out there help a completely out of the loop girl. I know I should plan for the future but I just have no idea what it all means and where I should go and what will suit best.
Thanks

Deemy

For your retirement planning look at a combination of cash isa's and sipps.

I don't know your income, but a guide should be 15% of your income.

Say £3k into a cash isa, and balance into SIPPS .. Yes 15% a lot ! But thats about how much you will need to put in over the next 30 years or so for decent retirement funds.

Yeh the ISA's run out in 2010, but likely somethign else will succeed them if not further extensions.

Though do spend plenty of time researching SIPPS before you jump in i.e. a good six months ! And get the CASH ISA NOW ! Well before the end of the tax year anyway

dunstonh

What about all the other products Deemy? That is very selective and given susancorsi's lack of knowledge in this area, the suggestion of a SIPP does seem rather over the top.

EdInvestor

Hi susan

susancorsi wrote:

I have been working overseas for 10 years so will not qualify for the full state pension.

Why not? You can qualify for the state pension by paying voluntary contributions very cheaply (less than a tenner a month). You can pay in arrears for six back years. Contact the Newcastle office for details.

How much should i be looking to put away in a pension a month?

Apart from the state pension as above, nil, because the only point in saving in a pension is to get UK tax relief, which is not normally applicable if you are working abroad.

.. and how much in savings?

Any spare money should be invested or saved. But how to do it most effectively depends a bit on where you are and how much you can put in. If you don't have much, probably best to open an offshore savings account with one of the big UK banks/BSs.If you have more, try a UK based online broker which will take foreign based clients with UK bank accounts,like Squaregain, and then buy some shares or funds with charges rebated.

susancorsi

no idea what an sipp is? i earn £19,000. and p.s. - no longer working overseas.

EdInvestor

OK let's start again...;)

First I suggest you catch up on the six years of contributions to the state pension.

After that, sicne you're a basic rate taxpayer IMHO you'd be better to concentrate on maxing out your ISA allowance, as this is a "use it or lose it" annual thing, whereas you can deal with the penion much later.

You can put up to 7k in an ISA annually, either all in shares/funds or 3k in cash and 4k in shares/funds.

dunstonh

A SIPP is a self invested pension. It is designed to cater for the more experienced investor with typically larger funds than. It needs a more hands on approach than a stakeholder or personal pension. With smaller funds, it would usually end up being more expensive than a stakeholder pension or personal pension.

Deemy

dunstonh wrote:

it would usually end up being more expensive than a stakeholder pension or personal pension.

Is that so ? :rotfl:


Tell em about the charges dear Dh, tell em about the charges

Sipp - What ? Sippdeal £17 annual...

Personal pension fund - what 1.5% to 3% for a the management fee alone , stakeholders 1%.

Which would you pay ? 1 to 3% or 0.001% ?

EdInvestor

Whether or not Sipps are more expensive depends on a number of things ranging from what the money is invested in (shares or funds for instance), whether there are new regular contributions of a lump sum going in, and how often the investments are changed or traded,plus what kind of Sipp you choose - a low cost online one, a more expensive insurance company one, or a bespoke special which enables you to do things like buy a commercial property in the Sipp.

Investing a lump sum of say 20k in shares, using a low cost online Sipp and a "long term buy and hold" strategy is very cheap indeed. Regular contributions into funds can be pretty cheap with the right choice of provider.

The Sipp approach can often be very suitable for those who want to collect together old pensions in one spot and invest them for a better return. (But note, if you do this, be sure to check on any valuable guarantees the pensions might have attached before moving them.)

dunstonh

Sipp - What ? Sippdeal £17 annual...

Personal pension fund - what 1.5% to 3% for a the management fee alone , stakeholders 1%.

Which would you pay ? 1 to 3% or 0.001% ?

Thats clever. Why not just show one charge of the many there are with SIPPdeal and totally ignore the underlying charges of the areas you invest in.

Seeing as you are just comparing wrappers and not the investments contained within. The charge on a modern personal pension or stakeholder wrapper is nil. So on the wrapper, SIPP deal is £17 p.a. more expensive than a stakeholder (ignoring the other SIPPdeal charges).

Pal

Personally I cannot understand why Deemy, who is obviously pretty bright, has such a mental block when it comes to understanding SIPP charges, no matter how many times the same points are made.